Question

Give a brief summary of each and explain why they are the most important

Benefit 3 A higher minimum wage could reduce government welfare spending. If low-income workers earned more money, their dependence on, and eligibility for, government benefits would decrease. The Center for American Progress reported in 2014 that raising the federal minimum wage by 6% to $10.10 would reduce spending on the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) by 6% or $4.6 billion. [9] The Economic Policy Institute determined that by increasing the minimum wage to $10.10, more than 1.7 million Americans would no longer be dependent on government assistance programs. They report the increase would shave $7.6 billion off annual

Cost 3 Raising the minimum wage would increase the price of consumer goods. A 2013 article by the Federal Reserve Bank of Chicago stated that if the minimum wage is increased, fast-food restaurants would pass on almost 100% of their increased labor costs on to consumers and that other firms may do the same. [2] A 2015  University study found that raising the wage of fast food restaurant employees to $15 or $22 per hour would result in a price increase of 4.3% and 25% respectively, or a reduction in product size between 12% and 70%: "a hamburger would be much smaller," the researchers stated. [53] NBC News found that the price of a cup of coffee went up by 10 to 20% in Oakland, California, after a 36% minimum wage hike in the city to government spending on incomesupport programs. $12.25. The report also found a 6.7% rise in coffee prices in Chicago after the minimum wage rose to $10. [54] The Alberta Hotel and Lodging Association (Canada) found that a "sudden and significant increase to the minimum wage" would result in "[i]ncreased prices for food & beverage, guest rooms and meeting facilities." [55]

Answer 1

Benefit of higher minimum wages are that it would lead to a tremendous reduction in government transfer payments and welfare expenditure. The low income earners would start to earn more and thus would depend less on government transfers and they will become self reliant.

The result is of significance because the government will be able to spend more on capacity building infrastructure rather than discretionary expenditure which doesn't have a significant multiplier effect. Tax rates could also be reduced which will increase investment of firms and individuals and thus will lead to increase in capacity expansion and measures. All these measures will drive future economic growth of the country.

On the other hand by raising minimum wages, the price of consumer goods will increase, as people will start earning more and will spend more, it will also lead to an increase in operating costs of the firms which will make them increase the price of the goods. Prices of other facilities will also tend to increase.

The cost is important because it will lead to inflation and price instability where price level's would increase and the purchasing power of the currency would decline. This will make labor costs expensive and make exports expensive at the same time as no one will be willing to import expensive goods and commodities. It will ultimately reduce the number of people employed and increase demand for skilled labor force vs. unskilled labor force and the wages of the unskilled labor force will tend to decline because of higher labor supply and lower demand.